By Asma Alsharif
CAIRO, April 7 Egypt is seeking to increase its
previously-requested $4.8 billion loan from the International
Monetary Fund to cover its soaring budget deficit, the planning
minister said in comments carried by three newspapers on Sunday.
"Egypt will intensify its efforts in the spring meetings of
the IMF in the period from April 16-21 to receive additional
funding to cover the financing deficit until mid-2015," Ashraf
El-Araby said in remarks carried by Al Masry Al Youm newspaper.
An IMF delegation is in Cairo for loan talks and Araby is
one of the ministers involved in the negotiations.
"There are ongoing discussions to increase the loan,
estimated at $4.8 billion but it may rise, especially with the
increase in the budget deficit to $20 billion," he was quoted as
saying. He gave no new figure and said the talks were not easy.
The minister told Al-Mal financial daily that if a deal is
not reached before May, talks will be postponed until October
when parliamentary elections are expected to start.
It was the first time a minister had confirmed that the
government was seeking to increase the size of the loan.
Finance Minister Al-Mursi Al-Sayed Hegazy was quoted on
April 2 as denying that Cairo had requested any change after a
senior IMF official said the amount could be raised if Egypt
Asked whether the loan would be increased to $5.5 billion,
Araby was quoted in Al-Shorouk daily as saying that figure was
wrong without giving details, and any increase would depend on
the expected rise in the budget deficit.
Egypt reached a provisional agreement with the global lender
for $4.8 billion in November but President Mohamed Mursi halted
implementation of the economic conditions the following month
after violence erupted over the extent of his powers.
The economic picture has worsened significantly since then,
widening the fiscal gap that needs to be plugged, while the
Egyptian pound has fallen nearly 10 percent against the dollar
Foreign reserves dipped further to $13.4 billion at
end-March, down from $13.5 billion a month earlier, equivalent
to less than three months' imports.
Egypt must convince the IMF it is serious about reforms
aimed at boosting growth and curbing an unaffordable budget
deficit. That implies tax hikes and politically risky cuts in
state subsidies for fuel and food, including bread.
Just before the visit, the government announced an increase
in the price of subsidised cooking gas. But it has postponed
plans to ration subsidised fuel using smart cards until July 1,
and some reports say that date may be pushed back further.
Egyptian and foreign analysts predict a long, hot summer of
power cuts, fuel shortages and a risk of food riots if Egypt has
to struggle on without IMF help. Foreign investment has dried up
and tourism has shrunk since a popular uprising toppled
autocratic President Hosni Mubarak in 2011.
Under IMF rules, the amount that member states can borrow is
related to their share in the fund's capital, known as a quota.
Economists say Egypt would be entitled to a much bigger loan
if recent IMF support for Morocco and Jordan is any precedent.
Morocco, which has a far smaller quota, received a $6.2
billion precautionary line of credit last year - about 700
percent of its quota. Rabat is treating the money as "insurance"
in case economic conditions deteriorate.
Jordan, with less than one-fifth of Egypt's quota, received
a $2 billion loan - some 800 percent of its quota.
However, the size of IMF financial support also depends on
the scope of the accompanying economic reform plan and the
fund's assessment of what economists call "implementation risk"
- the likelihood of the programme going off course.
Egypt balked in December at implementing an increase and
widening of sales tax, which officials said was an up-front
condition for the IMF loan.
Diplomats say without a greater political consensus, it will
be hard for Mursi's Muslim Brotherhood-led government to enforce
unpopular economic measures, especially in the run-up to the